Cell C has hit back at black empowerment partner CellSAf, saying accusations levelled against the Cell C board are "baseless".
This after CellSAf, which currently owns 25% of Cell C, issued a statement saying it "remains resolutely opposed to the so-called recapitalisation of Cell C" through which Blue Label will acquire 45% of the company for R5.5 billion and threatened to take Cell C to court if the deal goes ahead tomorrow.
CellSAf claimed the board of Cell C "has not consulted with CellSAf nor has it provided an opportunity for this shareholder to raise concerns related to this transaction with the company's management and board".
The board has now responded, saying that throughout the deal's process it has consistently followed lawful and good governance practices.
"In that regard, the directors who represent CellSAf in 3C Telecommunications, the sole shareholder of Cell C, received all necessary documentation and information pertaining to the recapitalisation plan and were fully informed throughout the process. Two of the directors representing CellSAf in 3C Telecommunications approved the recapitalisation plan in December 2015," Mohammed Hariri, chairman of Cell C and Oger Telecom, says in a statement.
"Since December 2015, CellSAf has launched several unsuccessful and ill-conceived legal proceedings in an effort to block the recapitalisation plan and even attempted to wind-up Cell C's holding company. The intended purpose of CellSAf's failed legal actions and claims was to obtain an undeserved and unwarranted financial gain," he adds.
Hariri says that to date, no credible alternative to the recapitalisation plan has ever been proposed by CellSAf.
At the moment, Cell C is 100% owned by 3C Telecommunications, which in turn is 60% owned by Oger Telecom South Africa, a division of Saudi Oger; 25%-owned by CellSAf; and 15% by Lanun Securities SA, which is a subsidiary of Saudi Oger.
CellSAf, however, said that under the new financing structure its indirect shareholding will be reduced to 7.5%, for which it will be expected to assume additional liabilities of almost R3 billion.
However, Hariri says CellSAf's claim that it is expected to assume additional liabilities "is completely untrue".
"It is important to note that CellSAf holds a 25% debt-free and unencumbered stake in 3C Telecommunications and therefore has no liabilities. Contrary to its claims in the media, CellSAf has also never provided any financial investment or operational support to Cell C since its launch."
Hariri says the Oger Group, on the other hand, has invested over $1.5 billion (R19 billion) over the last 16 years to ensure Cell C continues to operate, despite never receiving any dividends. He says Oger Telecom has also agreed to support the recapitalisation plan solely in furtherance of Cell C's future and will receive no pay-out whatsoever from the implementation of the plan.
Hariri says that once completed, the restructuring will see Cell C's historically disadvantaged individuals (HDI) ownership credentials increase to more than 30%, from its current 25%.
The Cell C board says it is is disappointed by CellSAf's statements given that the recapitalisation of Cell C will ensure a sustainable business for all concerned, including CellSAf.
Hariri says the recapitalisation will bring new cash equity as well as the contribution of strategic partners into Cell C, both of which are critical to Cell C's continued growth and success.
Green light
Blue Label, meanwhile, released a SENS announcement this afternoon confirming the deal will in fact go ahead. Blue Label says a "binding umbrella restructure agreement" has been entered into by itself, Cell C, debt providers of Cell C, a third-party investor and other relevant parties.
In terms of the agreement, Cell C's maximum net borrowings will be reduced to approximately R6 billion, compared to over R20 billion currently. The third-party investor will subscribe for 15% of the share capital of Cell C for R2 billion and Blue Label's subscription for 45% of the share capital of Cell C remains unchanged.
Blue Label says the "binding restructure agreement is subject to the conclusion of the relevant transaction agreements" which are expected to be concluded by 30 June 2017 at the latest.
Cell C also confirmed in a statement this afternoon that it had signed a restructuring agreement with its key lenders, majority bondholders and new equity investors by which its debt will be reduced through a combination of fresh equity injections and an exchange of Cell C debt for equity.